Friday Closing Dairy Market Update - Lowest Replacement Heifer to Milk Cow Ratio Recorded

MILK:

Milk futures fell significantly for the second consecutive day. The pressure today stemmed from the decline of cheese, butter, and dry whey prices. Traders reacted negatively to President Trump moving forward with implementing tariffs on Mexico and Canada. There is much uncertainty going into the weekend and traders did not like it. A retaliation by Mexico could be a huge deal for dairy if they reciprocate with tariffs on dairy products. Mexico is a large importer of dairy products from the U.S. The Cattle Inventory report showed milk cow numbers on Jan. 1 at 9,349,300 head and milk replacement heifers at 3,914,300 head. The ratio of milk replacements to milk cows is 41.9% and the tightest ratio for January ever recorded. This was not surprising as the heifer supply is tight. The December Agricultural Prices report showed an average corn price of $4.23. An alfalfa hay price of $164 per ton. The average soybean price at $9.79 per bushel. The average premium/supreme hay price at $230 per ton. The All-milk price was $23.30 per cwt.

AVERAGE CLASS III PRICES:

3 Month:	$19.89
6 Month:	$19.46
9 Month:	$19.26
12 Month:	$19.14

CHEESE:

For the week, blocks increased 4.50 cents with 17 loads traded. The average price for the week is $1.9005. Barrels decreased one cent with 13 loads traded. The average price for the week is $1.8490. Dry whey decreased 5.75 cents with two loads traded. The average price for the week is 67.70 cents. Buyers pulled back on cheese today in fear of the impact the tariffs on Mexico and Canada would have on dairy exports.

BUTTER:

For the week, butter decreased 9.75 cents with 20 loads traded. The average price for the week is $2.4745. Grade A nonfat dry milk slipped 0.25 cent with nine loads traded. The average price for the week is $1.3460. This is the lowest butter price since July 23. Further weakness is possible.

OUTSIDE MARKETS SUMMARY:

March corn closed down 8.25 cents per bushel at $4.8200, March soybeans closed down 2.00 cents at $10.4200 and March soybean meal closed down $3.60 per ton at $301.10. March Chicago wheat closed down 7.00 cents at $5.5950. April live cattle closed up $0.80 at $202.30. March crude oil is up $1.01 per barrel at $73.74. The Dow Jones Industrial Average is down 337 points at 44,545 with the NASDAQ down 54 points at 19,627.

Friday Midday Dairy Market Summary - Class III Futures Plummet

OUTSIDE MARKETS SUMMARY:

CORN:	9 Lower
SOYBEANS:	4 Lower
SOYBEAN MEAL:	$4.70 Lower
LIVE CATTLE:	$0.07 Higher
DOW JONES:	238 Points Lower
NASDAQ:	109 Points Higher
CRUDE OIL:	$0.14 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 5.75 cents, closing at $1.8775 with no loads traded. The barrel cheese price declined 5.50 cents, closing at $1.81 with no loads traded. No buyers showed up in either category. The dry whey price declined by 2 cents, closing at 64 cents with no loads traded with no buyers showing up during spot trading. Class III futures are 75 cents lower to 2 cents higher. The limit down movement is in the March contract. The butter price declined 1.75 cents, closing at $2.4325 with one load traded and three uncovered offers remaining at the close. Grade A nonfat dry milk remained unchanged at $1.3450 with no loads traded. Class IV futures are 10 cents lower to 25 cents higher. The higher prices were in the February and March 2026 contracts. Butter futures are 0.90 to 2.52 cents lower. Dry whey futures are 2.70 cents lower to 0.55 cent higher. The Agricultural Prices and Cattle Inventory reports will be released this afternoon.

Friday Morning Dairy Market Update - Class III Futures Are Under Pressure

OPENING CALLS:

Class III Milk Futures:	15 to 30 Lower
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	6 to 8 Lower
Soybean Futures:	4 to 6 Lower
Soybean Meal Futures:	$4 to $5 Lower
Wheat Futures:	8 to 10 Lower

MILK:

Class III milk futures came under substantial pressure late Thursday and continued that pressure overnight. It seems the selling is the result of President Trump moving forward with 25% tariffs on Mexico and Canada on Feb. 1. This could impact agricultural trade between the countries as both Mexico and Canada indicated they would retaliate with their own tariffs. Traders are reacting to the fear of reduced dairy product exports. The December Agricultural Prices and Cattle Inventory reports will be released Friday afternoon.

CHEESE:

Traders will focus on spot cheese trading Friday to see whether buyers remain aggressive or if sellers will sell cheese more aggressively. If cheese prices increase, the recent heavy losses in milk futures may reverse to some extent. However, traders will remain cautious ahead of the weekend.

BUTTER:

The butter price continues to weaken with price falling back to the lowest level since June 30, 2023. Further weakness is possible as buyers see no need to be aggressive and butter plants want to limit the building of inventory. Churning remains active, leaving sufficient butter supplies available to the market.

Thursday Closing Dairy Market Update - Tariff Talk Might Have Pressured the Market

MILK:

Class III milk futures declined through the time when the CME settled the market for the day. After the settlement, further selling pressure took place with contracts through the first half of the year falling significantly. The only possibility of this pressure could be that President Trump announced he will decide whether to place 25% tariffs on imports of Mexican and Canadian oil. The reason for this is to curb the flow of migrants and fentanyl into the U.S. The fear is that these countries could retaliate with tariffs of their own. This could impact dairy exports to these countries and further slow demand. They are two of the top trading partners of the U.S. Dairy exports may not be affected but the perception impacts the market. Milk output over the past week is termed as steady in some areas while slowly improving in others. Heifer prices have been increasing as the supply remains tight. The Bi-annual Cattle Inventory report on Friday will show the ratio of milk replacements to milk cows.

AVERAGE CLASS III PRICES:

3 Month:	$20.00
6 Month:	$19.65
9 Month:	$19.37
12 Month:	$19.23

CHEESE:

The action of the spot cheese market today could either indicate support has developed in the market as buyers are willing to purchase at current levels or the possibility that prices have reached levels at which it is attractive for sellers to offer cheese on the spot market. The current supply of cheese is not tight, but also not overabundant.

BUTTER:

The butter price declining to the lowest level since June 30, 2023, indicates there is sufficient supply of butter available for demand. Manufacturers continue to move supply to the market to limit the building of inventory. Inventory seasonally increases during the first half of the year before demand improves utilizing current production supplemented with inventory. Buyers see no need to be aggressive at the present time.

OUTSIDE MARKETS SUMMARY:

March corn closed down 6.75 cents per bushel at $4.9025, March soybeans closed down 16.50 cents at $10.4400 and March soybean meal closed down $5.10 per ton at $304.70. March Chicago wheat closed up 4.00 cents at $5.6650. April live cattle closed down $3.45 at $201.50. March crude oil is up $0.50 per barrel at $73.12. The Dow Jones Industrial Average is up 169 points at 44,882 with the NASDAQ is up 49 points at 19,682.

Thursday Midday Dairy Market Summary - Dry Whey Drops 3 Cents

OUTSIDE MARKETS SUMMARY:

CORN:	7 Lower
SOYBEANS:	17 Lower
SOYBEAN MEAL:	$5.40 Lower
LIVE CATTLE:	$2.17 Lower
DOW JONES:	267 Points Higher
NASDAQ:	14 Points Higher
CRUDE OIL:	$0.35 Higher

MIDDAY MARKET UPDATE:

The block cheese price gained 0.50 cent closing at $1.9350 with five loads traded. Blocks initially declined 0.25 cents before buying interest brought the price back up from the low. The barrel cheese price remained unchanged at $1.8650 with four loads traded. The dry whey price declined 3 cents, closing during spot trading at 66 cents with one load traded. Class III futures are 2 cents lower to 9 cents higher. The butter price declined a penny closing at $2.45 with two loads traded. This moves the price to the lowest level since June 30, 2023. Grade A nonfat dry milk closed at $1.3450 with seven loads traded. Class IV futures have not yet been traded. Butter futures are 0.75 cent lower to 0.82 cent higher. Dry whey futures are 0.20 to 1.70 cents lower.

Fluid Milk and Cream - Western U.S. Report 5

For California, milk production continues to trend steadily higher week-over-week to finish out the month. In terms of a year-over-year comparison for the last week of January 2025, processors indicate milk production continues to be down. Stakeholders note processing space is tightening partly due to plant downtimes. Class I demand is strong. Class II, III, and IV demands are steady. According to the California Department of Water Resources, as of January 28, 2025, the statewide precipitation total for the current water year is 1.78 inches below the historical mean. As of January 29, 2025, statewide total snowpack for the current water year is below average according to the California Department of Water Resources. 

Farm level milk output in Arizona is strengthening. Class I demand is stronger. All other Class demands are steady. 

Milk production in New Mexico is seasonally stronger. Spot milk loads continue to be snugger than spot cream loads throughout the southern states of the region. Class I demand is strong. Class II, III, and IV demands are steady. 

Handlers in the Pacific Northwest convey farm level milk output as steady or stronger. Manufacturers generally note receiving sufficient milk volumes for planned schedules. Processors indicate milk volumes are meeting the needs of planned production schedules. Class I demand is stronger, while demand for all other Classes is steady. 

In the mountain states of Idaho, Utah, and Colorado, processors note milk production as stronger and milk components as strong. Stakeholders in Idaho convey snowpack has been on the light side thus far for the winter season. For Idaho, manufacturers indicate milk volumes and plant capacities to be balanced overall. Like the rest of the region, demand for Class I is strong and demands for all other manufacturing Classes are steady. 

Cream volumes continue to be plentiful. Cream multiples are unchanged this week. Cream demand varies from moderate to steady. Condensed skim milk demand is steady. Condensed skim milk spot loads are generally available throughout the West region.

Thursday Morning Dairy Market Update - Cheese Prices May Have Limited Upside

OPENING CALLS:

Class III Milk Futures:	4 to 6 Higher
Class IV Milk Futures:	4 to 8 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	8 to 10 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	Mixed

MILK:

Milk futures are expected to remain choppy. The increase in the block cheese price on Wednesday did not get traders excited as it had already been factored into the market. There have been no significant fundamental changes in the market. The supply of milk is sufficient for demand and is expected to remain that way for the near future. Milk output may continue to trend higher as the weather is good for cow comfort and cow numbers are holding. The heifer supply is tight, but some expansions are taking place and are finding cattle but are paying a high price for them. The Bi-annual Cattle Inventory report will be released on Friday and will show the inventory and values of all cattle and calves. The milk cow/heifer ratio is expected to show a near record tightness.

CHEESE:

More trading activity took place in the spot market on Wednesday suggesting the higher prices are increasing the interest of plants to sell supply to limit inventory build. There is sufficient cheese available for demand. Steady demand may keep the upside price potential limited.

BUTTER:

The butter price falling to the lowest level since December 2023 had been unexpected, but not surprising given the abundant supply of cream and active churning schedules. There may be further price weakness, but buyers may be more aggressive to purchase as a hedge against higher prices that may unfold as the year progresses.

Wednesday Closing Dairy Market Update - Dairy Exports Decline in November

MILK:

Milk production leveled off in some areas while others showed increases compared to a year ago. There is sufficient milk available for demand leaving the market supported at the lower levels but with limited upside potential. The increase in block cheese price did not provide further support to Class III futures as the market already had it factored in. Supply and demand seem to be in balance with buyers and sellers doing business as needed. Spot milk prices have not changed over the recent weeks with spot prices in the Central regions ranging from $1.00 under class to even with class. Dairy exports in November declined 9% from a year ago. The decline was fueled by the lower exports of nonfat dry milk/skim milk powder. Added to this were lower exports of low-protein whey.

AVERAGE CLASS III PRICES:

3 Month:	$20.22
6 Month:	$19.80
9 Month:	$19.55
12 Month:	$19.38

CHEESE:

November cheese exports totaled 39,503 metric tons, up 2.4% from November 2023. Year-to-date exports were 17.5% above the same period a year ago. Lactose exports declined 11.8%, totaling 31,631 metric tons. Year-to-date exports are down 9.1%. Whey exports declined 11.5%, totaling 38,765 metric tons with year-to-date up 4.3%. Whey protein concentrate +80 increased 3.0%, totaling 7,521 metric tons with year-to-date exports up 16.6%.

BUTTER:

Butterfat exports showed another month of strong gains, totaling 4,449 metric tons, up 126.4% above November 2023. Year-to-date exports are 25.2% higher. Nonfat dry milk/skim milk powder exports fell 19.7% to 54,100 metric tons with year-to-date exports down 6.5%. Whole milk powder exports jumped 53.6% to 2,442 metric tons. Year-to-date exports are 3.3% lower than the previous year.

OUTSIDE MARKETS SUMMARY:

March corn closed up 11.75 cents per bushel at $4.9700, March soybeans closed up 15.50 cents at $10.6050 and March soybean meal closed up $8.20 per ton at $309.80. March Chicago wheat closed up 17.25 cents at $5.6250. April live cattle closed down $2.33 at $204.95. March crude oil is down $0.74 per barrel at $73.03. The Dow Jones Industrial Average is down 137 points at 44,714 with the NASDAQ is down 101 points at 19,632.

Wednesday Midday Dairy Market Summary - Butter Drops to Multi-year Low

OUTSIDE MARKETS SUMMARY:

CORN:	10 Higher
SOYBEANS:	12 Higher
SOYBEAN MEAL:	$7.90 Higher
LIVE CATTLE:	$1.32 Lower
DOW JONES:	72 Points Lower
NASDAQ:	185 Points Lower
CRUDE OIL:	$1.21 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased by 4 cents, closing at $1.93 with three loads traded. The barrel cheese price remained steady at $1.8650 with five loads traded. There was an unfilled bid for a load of barrels remaining at the close of spot trading. The dry whey price decreased 0.75 cent closing at 69 cents with one load traded. This is the lowest dry whey price since Nov. 26, 2024. Class III futures are mixed, ranging from 5 cents higher to 10 cents lower. The butter price decreased by 4 cents, closing at $2.46 with four loads traded. This is the lowest price since Dec. 14, 2023. If the price declines further, it will be back to the lowest level since June 2023. Grade A nonfat dry milk slipped 0.25 cents closing at $1.3450 with two loads traded. Class IV futures are 13 cents lower in the contracts traded. Butter futures are 1.00 to 4.47 cents lower. Dry whey futures are 0.22 to 1.02 cents lower.

Wednesday Morning Dairy Market Update - Cheese Prices May See Further Gains

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 8 Lower
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 6 Higher
Soybean Futures:	6 to 8 Higher
Soybean Meal Futures:	$3 to $4 Higher
Wheat Futures:	3 to 4 Higher

MILK:

It is unusual to see milk futures trading activity in contracts in the second half of the year during the overnight market. There is interest in buying those contracts with the anticipation of stronger prices as the year progresses. However, to see higher prices the demand needs to improve. Lower milk production than a year ago and the current lower demand leaves the market balanced and prices lower. Weather has been generally good for cow comfort. Milk component values remain at record levels. The Dairy Margin Coverage signup period begin Wednesday and runs through March 31. Signup takes place at your local FSA office.

CHEESE:

Spot trading on Tuesday suggests higher cheese prices might be seen Wednesday. Prices moved higher with no trading activity. No sellers showed up during spot trading, suggesting they are holding for higher prices. However, business will be done as buyers and sellers need to either move supply or fill orders.

BUTTER:

The butter price declining to the lowest level of the year and back to the lowest since Dec. 16, 2024, may indicate that the price could fall back to the low of $2.4650 from Dec. 13, 2024. It certainly is a different market than a year ago when the price was trending higher. Higher inventory and abundant cream supplies may keep the price lower for a while.

Tuesday Closing Dairy Market Update - Cattle Slaughter Remains Above a Year Ago

MILK:

Class III and Class IV milk futures diverged. Class III futures increased posting double-digit gains in numerous contracts while Class IV futures showed numerous contracts with double-digit losses. Class IV futures remain above Class III, but the spread is narrowing. The June Class IV contract is the only one below $20.00. Milk production for the fourth quarter of 2024 was down 0.1% compared to the fourth quarter of 2023. Milk production for the year was down 0.2%. Cow numbers in the fourth quarter totaled 9,359 million head, up 10,000 head from a year ago. Milk production totaled 55.470 billion pounds, down 59.0 million pounds from a year ago. Dairy cattle slaughter totaled 224,500 head in December. This was an increase of 14,200 head from November, but down just 200 head from December 2023.

AVERAGE CLASS III PRICES:

3 Month:	$20.21
6 Month:	$19.82
9 Month:	$19.56
12 Month:	$19.41

CHEESE:

Cheese prices increasing with no sellers showing up during spot trading today would suggest prices may move higher on Wednesday. However, increasing prices will bring sellers back into the market to move supply at higher prices. The current level of demand may not allow cheese prices to move much higher unless milk production declines. Demand is generally slower during the first quarter or even the first half of the year. Inventory generally increases during that time. Manufacturers will attempt to limit the building of inventory.

BUTTER:

The butter price falling to the lowest level since Dec. 16, 2024, does not bode well for the price outlook. The price a year ago was trending higher, but that is certainly not the case now. The price is expected to increase at some point, but the current heavy cream supply keeps sufficient butter available for demand.

OUTSIDE MARKETS SUMMARY:

March corn closed up 3.25 cents per bushel at $4.8525, March soybeans closed steady at $10.4500 and March soybean meal closed up $.80 per ton at $301.60. March Chicago wheat closed up 9.75 cents at $5.4525. April live cattle closed up $3.45 at $207.28. March crude oil is up $0.74 per barrel at $73.91. The Dow Jones Industrial Average is up 137 points at 44,850 with the NASDAQ up 392 points at 19,734.

Tuesday Midday Dairy Market Summary - Butter Price Shows Further Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	7 Higher
SOYBEANS:	4 Higher
SOYBEAN MEAL:	$2.00 Higher
LIVE CATTLE:	$2.87 Higher
DOW JONES:	168 Points Higher
NASDAQ:	354 Points Higher
CRUDE OIL:	$0.02 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 2 cents closing at $1.89 with no loads traded. The barrel cheese price increased 2.50 cents closing at $1.8650 with no loads traded. There was an unfilled bid in each with no sellers showing up during spot trading. This leads to the idea that further strength may be possible. The dry whey price remained unchanged at 69.75 with no loads traded. Class III futures are steady to 39 cents higher. The butter price decreased 3 cents closing at $2.50 with eight loads traded. This is the lowest price since Dec. 16, 2024. Grade A nonfat dry milk remained unchanged at $1.3475 with no loads traded. Class IV futures are 5 to 22 cents lower. Butter futures are 0.52 to 3.15 cents lower. Dry whey futures are 0.50 cent lower to 0.65 cent higher. 

Tuesday Morning Dairy Market Update - Trader Cautious Over Further Gains

OPENING CALLS:

Class III Milk Futures:	4 to 6 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Higher
Soybean Futures:	1 to 2 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	1 to 2 Higher

MILK:

Class III milk futures rebounded nicely on Monday from the higher cheese prices. Traders are quick to react but are not taking long-term positions. They continue to scalp the market attempting to take a quick profit if they can get one. The jump on Monday did not follow through overnight as some decided to either liquidate positions or sell at higher prices anticipating prices will remain choppy. It will be difficult for futures to regain the losses of the past three weeks without a significant increase in demand and/or a contraction of milk production. Milk production is below a year ago, but increasing seasonally leaving sufficient supply available for demand.

CHEESE:

Cheese prices are expected to be choppy. The volatility seems to be decreasing for the time being. The daily price moves have not been quite as dramatic. Current cheese production is sufficient for demand. Inventory began to build in December and should continue for much of the first half of the year.

BUTTER:

A year ago, the butter price was $2.8025 compared to $2.53 currently. Cream supplies were not as abundant as this year and inventory was lower. The price may slowly trend higher but will remain choppy. Price increases will be met will selling as manufacturers want to limit plant inventories.

Monday Closing Dairy Market Update - Milk Futures May Have Limited Upside

MILK:

Class III milk futures showed strong gains rebounding from the lows last week. The strength was due to the increase in cheese prices during spot trading. The strength was not likely the result of lower milk production and lower cheese inventory in December as these have already been factored into the market. It was buyers trying to purchase cheese at the lower prices with sellers not being aggressive today. Milk production was expected to be below a year ago, which was not a surprise. Production in the country was 0.5% below a year ago with cow numbers declining by 9,000 head from November but 3,000 head more than a year ago at 9.351 million head. Milk production per cow was 10 pounds lower than December 2023 which kept production from increasing. Fourth quarter milk production was down only 0.1% from a year ago. There were 11 states with milk production declines. The state with the largest percentage decline in milk production was Oregon with a decline of 8.2%. California showed a decline of 6.8% with Arizona down 5.1%. The rest of the states were down 3.3% or less. The largest production increase was in Texas with a gain of 7.5% followed by South Dakota with a gain of 6.4%. All the other gains were less than 4.0%.

AVERAGE CLASS III PRICES:

3 Month:	$19.91
6 Month:	$19.57
9 Month:	$19.37
12 Month:	$19.25

CHEESE:

The increase in cheese prices was not likely a change in trend but just the normal movement of the market. Sufficient cheese is available to the market which is expected to keep prices in a range. The buyers and sellers will do business when the price is right, creating volatility. Cheese inventory is below a year ago but that was expected as it has been running below a year ago for much of the year.

BUTTER:

The butter price is expected to remain in a range and at lower levels. December inventory was 11% higher than December 2023. This was a surprise as inventory in November was even with a year ago. Butter stocks increased by 8.7 million pounds, but the increase pushed stocks higher by comparison. Heavy cream supplies might increase inventory more rapidly than a year ago.

OUTSIDE MARKETS SUMMARY:

March corn closed down 4.50 cents per bushel at $4.8200, March soybeans closed down 10.75 cents at $10.4500 and March soybean meal closed down $4.10 per ton at $300.80. March Chicago wheat closed down 8.50 cents at $5.3550. April live cattle closed up $0.80 at $203.83. March crude oil is down $1.56 per barrel at $73.10. The Dow Jones Industrial Average is up 289 points at 44,714 with the NASDAQ down 612 points at 19,342.

Monday Midday Dairy Market Summary - Class III Futures Respond to Higher Cheese Prices

OUTSIDE MARKETS SUMMARY:

CORN:	6 Lower
SOYBEANS:	11 Lower
SOYBEAN MEAL:	$5.20 Lower
LIVE CATTLE:	$0.80 Higher
DOW JONES:	57 Points Higher
NASDAQ:	681 Points Lower
CRUDE OIL:	$1.85 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 3.75 cents closing at $1.87 with nine loads traded. The barrel cheese price increased 2 cents closing at $1.84 with three loads traded. It is one of the rare times when block and barrels move to a historically normal 3 cents. There were two unfilled bids for blocks and two for barrels with an uncovered offer remaining for a load of barrels at the close of trading. The dry whey price remained unchanged at 69.75 cents with no loads traded. Class III futures are 2 cents lower to 60 cents higher with February showing the greatest gain. The butter price remained steady at $2.53 with five loads traded. Grade A nonfat dry milk remained steady at $1.3475 with no loads traded. Class IV futures have only had trading in the September contract at 10 cents lower. Butter futures are 0.37 to 2.12 cents lower. Dry whey futures are 0.30 to 0.70 cent higher.

Monday Morning Dairy Market Update - Cash Uncertainty Will Dominate Early Trade

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Lower
Soybean Futures:	7 to 9 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	3 to 4 Lower

MILK:

It will be difficult for traders to get excited over strength in the market anytime soon. The market will need to prove itself before traders will become bullish again. Even if cheese prices increase, it will initially be met with skepticism as the recent volatility will keep traders cautious. The milk production report did not provide anything for traders to get excited over with milk down about as expected with milk production down only 0.2% for the year. Cow numbers were lower than in November, which may be positive moving forward. However, cow numbers remain higher than a year ago. Traders may not become too excited unless demand improves, and supplies tighten.

CHEESE:

Cheese prices are expected to remain volatile as buyers and sellers take care of business at the desired level. They sell cheese when prices increase and buy when they decrease. But without the need to be aggressive, the volatile price swings will continue.

BUTTER:

The price is expected to remain in a lower range. The increase in inventory in December was moderate, but it did end the year 11% higher than in 2023. This was a surprise as the inventory in November was right in line with the previous year. Strong butter production might increase butter inventory significantly during the first quarter.

Friday Closing Dairy Market Update - Milk Production Falls 0.4% From Year-Ago Levels

MILK:

Milk prices traded higher through the June 2025 contract months following firm underlying support in the dairy complex, combined with moderate to active price volatility through other ag commodity markets Friday. Lightly traded and soon-to-expire January contracts are still rooted above $20 per cwt, with prices gaining 3 cents per cwt. February futures led the market with a strong end-of-the-week rally holding through the closing bell. These actively traded contracts posted gains of 22 cents per cwt at the closing bell, settling at $19.37 per cwt. The expectation that milk production continues to fade lower through the end of 2024 and confirmed by the Milk Production Report released Friday afternoon is helping to bring limited but supporting buyer interest back into the complex. All other nearby contracts posted slight single-digit gains while deferred contracts were very lightly traded with thin losses at the end of the week. The number of milk cows on farms in the 24 major States was 8.91 million head, 17,000 head more than December 2023, but 8,000 head less than November 2024. Current cattle and beef values are creating incentive to move lower-producing cows out of the herd at this time. This could continue to reduce overall dairy herd numbers in the coming months.

AVERAGE CLASS III PRICES:

3 Month:	$19.58
6 Month:	$19.27
9 Month:	$19.16
12 Month:	$19.08

CHEESE:

Cash cheese prices were steady to higher Friday with block cheese prices posting a moderate gain of 1.25 cents per pound. The upward support in block cheese markets helped to push prices to $1.8325 a pound with moderate sales reported during the session. Barrel cheese prices remained unchanged at $1.82 per pound. Five loads of block cheese sold on the exchange during the last trading day of the week, while one load of barrel cheese sold at a steady price of $1.82 a pound. One bid of block cheese remained on the exchange floor. While one uncovered offer for barrel cheese remained untraded. Weekly volume of block cheese stands at 13 loads, while barrel cheese reported 8 loads of product selling during the week. This moved block cheese's weekly average price to 1.8019 per pound, which is nearly 8 cents under last week's average price. Barrel cheese price average remains at $1825 per pound, which is nearly 5 cents below last week's average price. Total natural cheese stocks in refrigerated warehouses on Dec. 31, 2024, were up 2% from the previous month but down 6% from Dec. 31, 2023. Total natural cheese in current storage is at 1.36 billion pounds. American cheese stocks are at 772 million pounds at the end of December, which is 1% above November levels, but 8% below year-ago levels. Swiss cheese is the only cheese product where stocks are higher than year-ago levels with Swiss Cheese stocks 13% above year-ago levels. This is likely to have a very limited overall impact given that Swiss cheese is the smallest category of cheese separately listed on the report.

BUTTER:

Cash butter prices shifted higher Friday with prices gaining 1.75 per pound, moving to $2.53 per pound. A total of three loads sold on the exchange, with an additional 4 bids remaining on the floor and 2 offers unable to be filled. A total of 10 loads of butter sold on the exchange through the week, moving the current price average to $2.5233 a pound, which is nearly 4 cents under last week's average price. Nonfat dry milk prices decreased 0.5 cent per pound, with one load traded at the end of the week. Dry Whey prices slipped 0.25 cent per pound, moving to 69.75 cents per pound. On the monthly cold storage report released Friday afternoon, butter stocks were up 4% from last month and up 11% from a year ago. Total butter in storage at the end of December is listed at 222.3 million pounds. The significant shift higher in butter stock levels, while cheese stocks are sliding lower could continue to have a moderate price impact over the upcoming days and weeks, although producers continue to build butter inventory ahead of the Easter and Passover demand season.

OUTSIDE MARKETS SUMMARY:

March corn closed down 3.25 cents per bushel at $4.8650, March soybeans closed down 9.75 cents at $10.5575 and March soybean meal closed down $10.40 per ton at $304.90. March Chicago wheat closed down 10.00 cents at $5.4400. April live cattle closed up $2.30 at $203.03. March crude oil is down .05 per barrel at $74.57. The Dow Jones Industrial Average is down 140.82 points at 44,424.25 and NASDAQ is down 99.38 points at 19,954.30.

December Milk Production down 0.4 percent

December Milk Production down 0.4 percent        

Milk production in the 24 major States during December totaled 18.0 billion pounds, down 0.4 percent from December 2023. November revised production, at 17.3 billion pounds, was down 0.3 percent from November 2023. The November revision represented an increase of 89 million pounds or 0.5 percent from last month's preliminary production estimate.  Production per cow in the 24 major States averaged 2,020 pounds for December, 11 pounds below December 2023.   The number of milk cows on farms in the 24 major States was 8.91 million head, 17,000 head more than December 2023, but 8,000 head less than November 2024.   

October-December Milk Production down 0.1 percent  

Milk production in the United States during the October - December quarter totaled 55.5 billion pounds, down 0.1 percent from the October - December quarter last year.  The average number of milk cows in the United States during the quarter was 9.36 million head, 29,000 head more than the July - September quarter, and 10,000 head more than the same period last year. 

Friday Midday Dairy Market Summary - Milk Futures Mixed

OUTSIDE MARKETS SUMMARY:

CORN:	3 1/2 Lower
SOYBEANS:	9 3/4 Lower
SOYBEAN MEAL:	$11.00 Lower
LIVE CATTLE:	$3.65 Higher
DOW JONES:	72 Points Lower
NASDAQ:	70 Points Lower
CRUDE OIL:	$0.25 Lower

MIDDAY MARKET UPDATE:

Cash cheese prices were steady to higher on the CME cash dairy market Friday morning. Barrel cheese prices were unchanged at $1.82 per pound with one load trading hands, while block cheese prices also moved to $1.8325 per pound following a 1.25 cents per pound gain with five loads selling. Butter was untraded with prices unchanged going Friday morning. Nonfat dry milk prices were also untested and untraded during the morning activity. Dry whey prices posted a fractional market loss of 0.25 cent per pound with three loads trading and no additional bids or asking prices seen on the exchange. Class III milk futures are mixed Friday morning with the most significant price activity seen in February contracts, while the rest of the complex posted mixed trade within a narrow single-digit price shift. The combination of wide market shifts through the rest of ag traded commodities as well as focus on the afternoon release of monthly dairy reports is impacting the February contract months. At midday, February futures are trading 18 cents per cwt higher at $19.33 per cwt. Aggressive moves higher in cattle futures and strong morning pressure in the grain trade is having an overall impact on dairy prices. Although volume still remains extremely sluggish at the end of the week. 

Friday Morning Dairy Market Update - Milk Production and Cold Storage Reports Today

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	8 to 10 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	2 to 3 Higher

MILK:

Overnight trade in Class III futures showed some short covering possible ahead of the weekend. However, trading activity was only confined to the February contract. Traders may be cautious ahead of spot trading as the market has been volatile and unpredictable. There are two major reports out Friday. The December Milk Production report will show the milk production level and milk per cow. It will also show the increase or decrease of cows from the previous month. I estimate milk production to be 1.0% below a year ago. I estimate cow numbers to be 1,000 head above November. The December Cold Storage report is expected to show cheese stocks significantly below a year ago. Butter stocks are expected to show an inventory that is slightly higher than that of a year ago.

CHEESE:

Cheese prices bounced back somewhat on Thursday possibly indicating a bottom has been reached. However, traders will need to see continued support before becoming aggressive buyers. There is no indication of tightening supplies or indication of significantly increasing demand.

BUTTER:

The lower butter price has not increased buying interest. Sufficient butter supplies and active churning have left buyers complacent and not willing to purchase more than they need for immediate demand. Manufacturers want to limit the building of inventory. The December Cold Storage report may show butter stocks increased during the month.

Thursday Closing Dairy Market Update - Markets Lack Direction

MILK:

Class III milk futures held steady with small gains of 3 to 27 cents higher. With milk sales lower, there is little to be excited about in the milk market this early in the year. Tomorrow, the USDA will release the Milk Production and Cold Storage reports to give a little news and hopefully some direction to these markets.

AVERAGE CLASS III PRICES:

3 Month:	$19.42
6 Month:	$19.14
9 Month:	$19.05
12 Month:	$19.00

CHEESE:

Cheese prices were mixed from 0.4 cents lower to 2 cents higher, somewhat lackluster trade after blocks rallied 4 cents in the cash market earlier today.

BUTTER:

Butter prices declined yet again today. Trading 1.5 to 1.75 cents lower on the futures market and 1 cent lower in the cash market. We are keeping an eye on cream supplies to give any indication of demand returning to the butter market but so far, no news to drive us higher.

OUTSIDE MARKETS SUMMARY:

March corn closed up 5.5 cents per bushel at $4.8925, March soybeans closed up 9.5 cents at $10.6550 and March soybean meal closed down $0.50 per ton at $315.30. March Chicago wheat closed unchanged at $5.5400. February live cattle closed up $1.05 at $201.10. March crude oil is down $1.22 per barrel at $74.22. The Dow Jones Industrial Average is up 408 points at 44,565 with the NASDAQ is up 44 points at 20,053.

Thursday Midday Dairy Market Summary - Cheese Blocks Continue Higher

OUTSIDE MARKETS SUMMARY:

CORN:	10 Higher
SOYBEANS:	15 Higher
SOYBEAN MEAL:	$0.30 Higher
LIVE CATTLE:	$0.70 Higher
DOW JONES:	345 Points Higher
NASDAQ:	52 Points Lower
CRUDE OIL:	$0.37 Lower

MIDDAY MARKET UPDATE:

Block cheese rallied 4.5 cents Thursday, settling at $1.8200, now over 7 cents higher from Wednesday's lows with three loads traded and no bids or offers remaining. The barrel cheese price also increased by a mere 1 cent to close at $1.82 with two loads traded. There were two bids and four offers remaining at the close. Class III Milk futures are holding steady to higher Thursday, with the biggest gains in the February contract of 29 cents, much to the relief of the market after such a poor performance week. Dry whey price had no changes, closing at 70 cents with no loads traded, five bids and one offer remaining unfilled. The butter price declined 1 cent closing at $2.5125 with four loads traded. Grade A nonfat dry milk remained unchanged, closing at $1.3525 with no loads traded. Class IV futures are steady. Butter futures are 16.25 cents to 19.75 cent lower. Dry whey futures are steady to 0.25 cents higher.

Fluid Milk and Cream - Western U.S. Report 4

For California, handlers note week-over-week increases in milk production throughout January thus far. Although stakeholders convey preliminary records indicate milk volumes to be up this month compared to December 2024, January 2025 milk volumes are below expectations of some handlers thus far. In terms of year-over-year milk production, handlers note January 2025 is down from January 2024. Stakeholders convey herd health is improving which is contributing to milk production recovery. Some plant downtime is taking place due to planned maintenance. Class I, II, III, and IV, demands are steady. 

Farm level milk output in Arizona is stronger. Processors indicate milk volumes are meeting production needs. All Class demands are steady. 

Milk production in New Mexico is stronger as well. However, like the other southern states of the West region, spot milk loads are more limited than spot cream loads. All Class manufacturing demands are steady. 

For the Pacific Northwest, handlers note milk production as steady or stronger. Processors note milk volumes continue to meet production needs. Demands for all Classes are steady. 

Stakeholders in the mountain states of Idaho, Utah, and Colorado indicate week-over-week milk production is generally trending higher. Spot milk load purchases above Class III prices are noted by buyers. In terms of contracted milk buying, some manufacturers convey multi-year agreements have been reached. In a few cases, manufacturers convey the length of the agreement is longer than what has been typical in the past. All Class demands are steady. 

Cream volumes are plentiful in the region. Although cream multiples moved higher this week, the low end of the All-Classes range remains comfortably below flat market pricing, at 0.80 for this week. Cream demand is mixed, and the sentiment of some cream sellers is more cream loads available than homes. Condensed skim milk demand is also mixed. Condensed skim milk availability is generally in line with expectations.

Thursday Morning Dairy Market Update - Milk Futures Find Stability Overnight

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	2 to 3 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	2 to 3 Lower

MILK:

The time of year may make it difficult to find something to be bullish about in the milk market. Underlying cash cheese prices indicated at the beginning of the year that prices could be supported due to reduced milk production compared to the previous year and steady demand. That was short-lived as milk production increased seasonally, but demand did not. It is early in the year, and this may change in time, but the magnitude of the weakness in cheese prices and Class III futures over the past two weeks has traders grappling with price direction moving forward. A significant change in the market is not expected in the near term, but we cannot forget the impact of the recent volatility in the underlying cash market. The USDA will release the December Milk Production and Cold Storage reports on Friday afternoon.

CHEESE:

The rebound from the lows during spot trading on Wednesday did not provide support to Class III futures, but may indicate a bottom may have been reached in the cash market for now. However, limited cash activity does not provide a solid indication of the true market. We should continue to expect significant volatility in the cash market in the near term.

BUTTER:

The current weakness of the butter market may continue with the price possibly moving back to the lows in December. The decline on Wednesday moved the price to the lowest it has been this year. Strong churning activity keeps sufficient supply readily available to the market.